California’s SB 616 Paid Sick Leave Bill Passed — Here’s What It Means

In October of 2023, California Gov. Gavin Newsom signed SB 616, a bill that extends the paid sick leave offered in the state. Instead of being limited to just three days, the new law extends the duration of paid sick leave to five days. This will have a notable impact on the benefits calculations of all employers, and you'll need to know exactly what it means for your employees. Take a closer look at what this bill could mean for your company.

What is SB 616?

SB 616 is part of a long-standing campaign to extend sick leave for workers in the state of California. It failed several times in the past but was ultimately successful, in part due to the influence of powerful unions. The unions were opposed by organizations representing employers, but the bill nonetheless passed the legislature in late 2023.

Much of the motivation on both sides of this bill came from the fallout of the COVID-19 pandemic. Union organizations argued that the rapid spread of disease by workers who could not take sick leave contributed to more people being affected by the illness. Meanwhile, employer organizations argued that small businesses still recovering from the pandemic would have difficulties covering the extra time off.

Strict Public Health Measures and Economic Stability

California issued its initial three-day required paid sick leave standard in 2014, and we saw how it affected the economy in the wake of the pandemic. Because workers did not have to choose between getting the paycheck they needed and staying home when they were sick, businesses were in some cases able to reopen faster due to diminishing virus rates. Unfortunately, workers who needed more than three days to overcome their illnesses still suffered. While some businesses never recovered from the pandemic, the economy overall benefitted from paid sick leave in ways that were not possible in regions with looser public health measures.

With SB 616 in effect, your business may experience higher initial costs for covering more paid sick leave without getting the benefit of the sick employee's labor. In the long run, though, sick employees should be less likely to spread their sicknesses to others, ideally leaving the rest of your employees able-bodied enough to perform their duties well. Additionally, the option for parents to stay home with sick children can prevent disease from spreading in schools when students would otherwise have to return to class while ill.

Overall Costs

While the SB 616 paid leave bill will benefit a wide range of workers and communities, it still comes with costs. The estimated total cost to the state of California for implementing SB 616  is approximately $34.6 million in the first year and $67.2 million annually thereafter (roughly split between CA’s General Fund and federal funds). These funds will expand sick leave to IHSS providers in California, including wage supplement payments for hours worked by an emergency backup provider when the original provider takes leave. Additionally, lawmakers anticipate a one-time cost of approximately $1.0 million to the Department of Social Services for related Case Management Information and Payrolling System automation updates.

Simplifying Payroll With SPLI

With a PEO partner like SPLI on your side, your business does not have to approach new payroll and benefit considerations alone. We have extensive experience working with payroll administration, employee benefits, risk management, and more, and can offer support in those areas while your business takes efforts to remain compliant with new California requirements and laws such as SB 616. 

Request a quote from our team today to learn more about how we can help your business and your employees.

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